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February 2004: Volume 46, Number 2

Making Wise Marketing Choices--Broadcast TV or Cable TV?
by David H. Martin

As an advertising medium, all TV advertising has the potential to grab attention and motivate action through its unique combination of pictures, sound and motion. But how can a water improvement dealer choose the right local TV advertising vehicles?

Dealers often ask me, “Which advertising media do you most frequently recommend for dealers?” I always tell them, “That depends.” It depends on such factors as the size of the dealer’s market, the relative costs of all available media, the dealer’s marketing objectives, and the size of his or her advertising budget.

It helps to know the relative strengths and weaknesses of various media and how you can use them together in integrated marketing campaigns. This is a marketing column intended to help dealers analyze and evaluate their various local media options--and better understand the pros and cons of using them--to help achieve specific objectives.

Pros and cons
For more than 50 years, broadcast TV has been the dominant television advertising medium in America. National and local TV viewing audiences were once divided primarily between the nearest affiliate stations of NBC, CBS and ABC. As recently as 1983, these three networks once shared 74 percent of primetime audience. By 2002-2003, the networks’ percentage plunged to just 47 percent--and that includes the upstart FOX network, launched in 1986. The remainder is scattered between PBS and new competitive forces such as UPN, WB, PAX, cable and satellite channels.

Today, with the explosion of other viewing choices such as cable, satellite TV, pay-per-view, rented videotape or DVD, and the Internet, the U.S. viewing audience has been permanently fragmented. Fewer viewers mean that water improvement dealers will reach fewer potential customers than ever when advertising on one local TV station.

Pros & cons of ‘free’ TV
The following lists the pros and cons of dealers advertising their businesses on broadcast TV.

* Universal: Ninety-eight percent of American homes have access to “free” broadcast TV

* Still commands best viewer loyalty: Of an average 18 hours viewing time per week, network affiliate stations capture six hours (one-third of all viewing time)

* Way of life continues: All age groups watch and the medium continues to attract new, younger audiences

* Mass exposure: Broadcast TV audiences are generally larger than cable TV

* Borrowed credibility: Local advertisers on network affiliate stations benefit from having their commercials seen in proximity to famous national advertisers

On the other hand, there also exist many drawbacks to advertising on “free” TV, and these include:

* Decreasing audience share: For over 20 years, the average “free” TV viewing audience has declined (lost to competitive electronic options)

* DVD/VCR use increasing: Eighty-five percent of homes have video recorders that compete with time spent watching commercial-sponsored shows

* Channel surfing: Changing channels every time a commercial appears is today common practice in many American homes

* Viewing decreases as income increases: Affluent viewers watch less “free” TV than low-income viewers

* Expense: Higher media costs than same-length commercials on cable TV

* Higher production costs: Local network affiliates often charge more to produce local dealer spots than cable TV companies

The Cabletelevision Advertising Bureau (CAB) reported 2001 revenues of $15.9 billion, of which 74.6 percent was derived from network cable advertising. Local advertisers’ slice of the cable ad revenue pie, conversely, continues to decline. In 1995, local commercials made up 25.5 percent of cable advertising revenues. By 2002, that percentage had dwindled to 22.7 percent. “Bargain TV” is hardly exploding in popularity among local advertisers.

Pros & cons of cable TV
We’ll now look at the advantages and disadvantages of promoting your company on cable TV. Here are some of the positives to keep in mind.

* More cable TV homes than ever: In 2001, homes with basic wired cable numbered nearly 70 million--or 68 percent--of all TV households

* Reaches affluent viewers: Eighty percent of cable TV viewers have household incomes of $50,000 or more

* Relatively inexpensive: Cable TV provides the same “sight, sound and motion” benefits at a lower cost-per-spot than broadcast (“free”) TV

* Lets advertisers target viewers by interests: With an average of 54 channel choices, advertisers can target specific groups by “their programs of interest,” i.e., nature and environment

* Customers watch what they pay for: Most cable TV subscribers tend to watch more cable TV shows to help justify the monthly expense

* Stronger in summer: Cable TV viewership increases in summer when popular network (“free”) TV shows are on hiatus and reruns take over

Meanwhile, some of the negatives to consider are as follows:

* Smaller audiences: With so many channels to choose from, cable TV viewership is much smaller for any individual show, rarely reaching even 3 percent of TV households

* Satellite TV competition: Satellite dishes are rapidly taking away cable TV customers, and it effectively “blocks out” local cable TV commercials, which means you can “get less than you pay for” when you buy local cable TV time

* Limited reach: Cable fails to reach one-third of homes, and penetration is unlikely to increase much beyond current levels due to emerging electronic options

* Advertising clutter: The problem of “too many commercials” is even worse on cable TV, which carries 17 percent more commercials than “free” TV

* More “zapping”: With as many as 28 commercials per hour, cable TV spots are more susceptible to viewer “zapping” via handy remote controls

* Proximity to low quality commercials: Your company image on cable TV may be compromised by low-class advertisers who are attracted to lower media costs

Trends against TV ads
Three trends may make water treatment dealers think twice before they budget money for TV advertising

* New technology wipes out commercials: TiVo and other programming recording devices can let viewers eliminate all commercials with ease

* Viewing restricted to home: While people are more and more “on the go,” TV’s ability to be “top of mind” is less than with more “portable” media like newspapers, direct mail, radio and even billboards

* The coming era of digital broadcast TV and digital cable TV threatens to inflict overwhelming channel choices and further audience fragmentation

Choosing the right mix
Perhaps the largest single user of local radio and TV dealer advertising is Culligan International. Though the company originally “built the brand” on co-op radio advertising, its long-established regional dealer advertising cooperatives are also intermittent users of local TV, both broadcast TV and cable. Indeed, the geography of Culligan dealer groups deliberately coincides with Designated Market Area (DMA’s), which define television viewing markets across the U.S.

We asked Culligan dealer, John Rourke, who heads up the Chicago-area advertising co-op, to tell us how and why their dealer co-op members distribute their local television advertising dollars between “free” TV and cable.

“We recently ran local 15-second TV spots on WMAQ-TV (Chicago’s NBC channel), focusing on the popular TODAY Show. These spots reached a broad audience and were paid for by Chicago Culligan dealer advertising co-op funds,” said Rourke, of Culligan of Mokena, Ill., a southwest Chicago suburban community. “At times, the co-op will also support local dealer TV advertising on cable channels, that target viewers in specific communities.”

Meanwhile, Bill Kennedy, of Kennedy Communications LTD, Madison, Wis., has planned and placed radio and TV advertising for 15 Culligan co-ops involving 150 dealers since 1981. Says Kennedy, “Buying TV is much more complicated today, with all the options on broadcast and cable. Cable TV is more effective toward getting to hard-to-reach males. And there are cable companies who now offer local news at very low cost as compared with broadcast TV news buys. But broadcast TV still offers higher reach at a lower cost-per-thousand.”

About the author
David H. Martin is president of Lenzi Martin Marketing, of Oak Park, Ill., a firm specializing in water improvement and environmental marketing that integrates old and new media. He can be reached at (708) 848-8404, email: dmartin@lenzimartin.com or website: www.lenzimartin.com

 
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